Smith v RBS – What happens next?

Article by Katie Wilkinson

Practitioners in the field of consumer law have been waiting months for the Supreme Court to hand down Judgment in Smith and another v Royal Bank of Scotland [2023] UKSC 34.

Judgment was handed down on 4 October 2023 and the decision reverses the views of the Court of Appeal in Smith v Royal Bank of Scotland plc [2021] EWCA Civ 1832 on the issue of the date that time starts to run for the purposes of the Limitation Act 1980.

Financial institutions would routinely advance defences of limitation in circumstances where the policy of PPI had ‘ended’, usually by way of cancellation, more than 6 years before the claim was issued (the 6-year period being prescribed by s.9 Limitation Act 1980).  The largely uncontroversial position was that such claims were prima facie time barred, and thus the claims themselves were statute barred unless a Claimant could establish the right to rely on s.32 (which acts to postpone commencement of the limitation period in cases of ‘fraud, concealment or mistake).

The effect of the Supreme Court Judgment results in cases that were statute barred in light of the Court of Appeal decision, being no longer statute barred in circumstances where the underlying credit agreement subsists as at the date of issue, or to a date within 6 years of the date of issue.

The Judgment will undoubtedly impact dozens of cases that are currently within the Court system and awaiting trial, and may lead to the issuing of further claims where historical PPI policies once existed on credit agreements that remain live.

Thousands of ‘PPI’ claims have already been issued and heard in the years leading up to the Supreme Court Judgment.  At a time when such claims were significantly decreasing in number, it remains to be seen whether the decision will reignite the consumer forums and result in a further round of mass litigation.

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